What is Fundamental Analysis in Forex Trading?

[Mdraghib]

Fundamental analysis in forex trading involves evaluating economic, political, and social factors that influence currency values. Traders analyze macroeconomic indicators, central bank policies, and geopolitical events to predict market movements.

Here are key factors in fundamental analysis:

• Interest Rates – Higher interest rates usually strengthen a currency.
• Inflation Rates – Rising inflation can weaken a currency’s value.
• GDP Growth – Strong economic growth often leads to a stronger currency.
• Employment Data – High employment levels indicate a strong economy.
• Central Bank Policies – Monetary policies and rate decisions impact currency value.
• Geopolitical Events – Political stability or uncertainty can affect forex markets.

Fundamental analysis helps traders make informed decisions by understanding the broader economic picture.